It is common practice to check prospective tenants’ credit reports before approving them for your rental property. This can greatly reduce your risks of accepting troublesome tenants, and can alert you to potential problems before an applicant signs a lease.
Before you can begin checking a tenant’s credit report, you will need the applicant to complete a written application. This written application should include an area for the applicant’s Social Security number, which is often necessary to run a credit report.
You will also need your applicant’s permission to perform the credit check. This can take the form of a clause within the written application, or be on a separate form. Your applicants will need to sign this release authorizing you to perform the credit check.
Credit reports can be expensive, particularly if you have large numbers of applicants. For this reason, many landlords request that the applicant cover the cost of the credit check. Be sure you know which credit report you need, and which service you will use, so you can request the correct amount from your applicants.
There are many different agencies and services that provide credit checks for landlords. Some require a membership fee, while others charge per report. If you have a large rental complex or a large number of applicants, you may be able to save money by selecting a membership service that offers bulk discounts.
Tenant Verification Service offers many different services for landlords. You can request a standard credit report, as well as more information on your applicant’s credit history, such as any current collections, liens, judgments, or bankruptcies, plus a nationwide criminal records search.
E-Renter.com provides credit reports complete with FICO scores, known credit patterns, and employment histories, in addition to the usual information on liens, account balances, and pending judgments. It also offers criminal reports and an evictions search.
Experian provides a three-credit-bureau report, covering the top three reporting agencies, including Equifax and Transunion, plus a free credit score. This is very helpful to get a complete picture of an applicant’s credit history.
AAA Credit Screening Services delivers a complete credit report within a couple of business days. It offers full tenant screening, including rental history verification, employment verification for current and previous employment, checking account verification, and criminal record checks, if you so choose. AAA Credit Screening Services also offers Canadian reports.
Using a screening service can reduce the amount of time you spend checking into a tenant’s background, allowing you to process more applicants and handle your regular property management tasks.
Anyone can have problems with their credit, and a bad credit report does not necessarily indicate that your applicant is a bad person. He or she may just have gone through a rough period in their life. While it’s important to utilize a credit check, do not select your applicants based solely on their credit reports. It can give you valuable insights, but it will not give you the full picture of an applicant.
Source : smallbusiness